The relationship between financial inclusion strategies and microcredit access among women-led micro enterprises in Kiko market, Mukono Municipality, Uganda

Abstract

This study examined the relationship between financial inclusion strategies and microcredit access among women led micro enterprises in Kiko Market, Mukono Municipality, Uganda. Guided by Financial Intermediation Theory and Social Capital Theory, the study pursued three objectives: to determine the effect of formal financial services on microcredit access; to analyse the contribution of financial literacy programs to microcredit access; and to assess the association between group lending models and microcredit access. A quantitative cross‑sectional survey was conducted with 300 women led micro enterprises selected through stratified random sampling. Data were collected using a structured questionnaire and analysed using descriptive statistics, Pearson correlation, and multiple regression analysis. The correlation results revealed that group lending models had the strongest positive correlation with microcredit access (r = 0.64, p < 0.01), followed by formal financial services (r = 0.52, p < 0.01) and financial literacy programs (r = 0.59, p < 0.01). Regression analysis confirmed that group lending models were the most influential predictor (β = 0.34, p < 0.001), indicating that social capital mechanisms such as peer monitoring and collective responsibility effectively substitute for physical collateral. Formal financial services contributed significantly (β = 0.22, p < 0.01), though constrained by collateral requirements and complex procedures. Financial literacy programs also showed a positive effect (β = 0.19, p < 0.05), suggesting that knowledge enhances credit access when combined with other strategies. The three predictors collectively explained 58.4% of the variance in microcredit access (R² = 0.584, F(3,296) = 138.72, p < 0.001). The study concludes that integrated, gender‑sensitive strategies combining group lending with simplified formal products and financial literacy are most effective for enhancing microcredit access among women‑led micro enterprises. Recommendations focus on strengthening VSLA networks, reducing collateral barriers, and scaling financial education programmes. Keywords: Financial inclusion, microcredit access, women led micro enterprises, group lending, formal financial services, financial literacy, Kiko Market, Uganda.